In most of the cases Dubai is completely tax-free:
There is no limit to the investment required to set-up a business in Dubai. Depending on the activities of your business, investing partners, the location of your business etc. You can invest as much or as little as you want to keep in mind the benefit of your employees and anyone involved in the business.
Licensing to carry out business activities in Dubai happens in three stages.
Dubai has been one of the top places to live in. It is also recognized as the fastest growing cities in the world and has the lowest crime rate. The emirate is home to several architectural wonders. Lifestyle in Dubai has always been ranked at the top of the index.
Depending on the company type, there are different types of visa requirements in Dubai. To live and work in Dubai, every foreign national need a residence visa and, In order to employ staff in your organization the manager of the company must have a residence visa which will then allow the company to recruit staff. Offshore incorporations do not require a residence visa as these do not entitle the holder to do business in UAE. Free zone incorporations allow for the issuance of residence visas depending on the size of the establishment.
It can take as little as five days or can take up to six weeks to start your business in Dubai depending on the company type and structure. Company registration is the initial step of which it is a matter of gathering all documentation.
All documents required for the issuance of residence visa and company registration need to be attested by the UAE embassy or consulate in the country of document origin. Furthermore, the same documents need to be attested by the Ministry of Foreign Affairs, UAE in Dubai.
Dubai is the financial hub in the Middle East. Thanks to its two ports, Dubai dominates the cargo and re-export markets. For over 20 years, Dubai economy has shown substantial growth with investment pouring in from all corners of the globe. It is also home to two major airlines Emirates and FlyDubai, with emirates being one of biggest airlines in the world. Apart from this, Dubai has a very large physical infrastructure spread all over the state with all kinds of services available almost everywhere.
Dubai has an entirely different set of laws for foreign investors who are setting up their businesses in Dubai. Paperwork and legal requirements are minimal and procedures are fast tracked so that it is extremely easy to set up a company, licensing and registration. Moreover, Dubai has laws and rules for hiring employees and their benefits are protected.
Dubai has probably the largest physical infrastructure in the region for businesses. The governing bodies of Free Zones provide excellent warehousing, office spaces, and other services.
People from more than 200 nationalities live and work in Dubai. There is no shortage of manpower in UAE. Both skilled and unskilled labor come to Dubai in search of work opportunity. Once you have established a country, you can either hire from the pool already available in Dubai or you can opt to hire people from your country of origin after fulfilling legal requirements.
The Government of Dubai and UAE provide all kinds of support for establishing a company or investing in UAE, like help with documents, licenses and so on.
Yes. More than three-quarters of goods entering the emirate are duty- free. Free trade zones in Dubai offer incentives to imports including exemptions from taxes and duties. The open border foreign trade policy has proved a major factor in allowing small businesses to expand.
An offshore company is an independent legal entity with limited liability and must have atleast one shareholder. The liability of the partners or shareholders is limited to their capital contribution.
Offshore business process outsourcing means running business from home country and exporting the services by a foreign-based company having lower labor rates and more tax saving.
An offshore company offers you a list of advantages:
There are two broad categories of offshore companies:
Though all offshore companies are different in their nature and according to the corporate law of the individual country, they carry certain features:
It is commonly believed that offshore companies are used to preserve the confidentiality of an individual’s black money. The reason behind this perception is that no clear information on their functioning is available and they are hard to contact which makes them questionable and dubious. Otherwise, their legitimate uses are seen in the form of trading vehicles, financing SPVs, holding companies, joint ventures, and asset holding structures.
The company does not need to maintain a physical presence in the freezone but is required to have a registered agent, whose address must be listed as the registered address for the offshore company in the place of its incorporation.
Offshoring aims at cost reduction in terms of tax and labor expenditures. So the companies do not generally bother about the other hidden costs of travelling, training, and communication. Since they plan for long term business, they have to bear with the business relationship costs.
Onshore providers are generally process experts of the local market and they control the processes of financial services, transportation, health care, and distribution channels. Thus they have complete market insight and are an inevitable part of business process offering business transformation competence.
Some of the companies have faced adverse criticism from the customers who have confronted the offshore processing. It is not easy to convince the customers that the information they shared in an offshore is secured. Difference of regulations, banking laws, cultures, and languages is also a challenge. Therefore, such differences have resulted in undesired outcomes and it has led to new laws and public policies worldwide to penalize the companies that use offshoring rather than onshoring. Such laws impact the industry sector, data regulation, transfer tax structure, transaction taxes, privacy, income tax, and compliance with the public company.
Current laws restrict the clients to disclose their locations (for example call centers), to show the place of contract with the government, to open the limited financial data and medical details of the offshore housing.
The main purpose of offshoring is to reduce costs through lower labor rates for getting the work done. The labor arbitrage is the difference of labor cost that is present between the home country and where the work is being done in another country. Difference of currency plays a vital role in the labor arbitration. For example, dollar is much higher in value than the currency of the developing nations. Therefore, labor from the abroad is hired to perform the given tasks and incorporation of lower costs serve the main purpose of an offshore company.
Generally, offshores are not allowed to trade under the jurisdiction where they are registered. In some countries, they have no such constraint and are free to trade within the country or abroad under the jurisdiction therein.
Secrecy is the first and foremost thing offered by offshore companies. They protect your business from the outside world and keep it anonymous to make it difficult for any individual or the government institutions to trace it. They engage the nominees to be nominated not as companies but as individuals.
Privacy is one of the most important factors. Offshore companies keep the least burden of disclosing personal and financial information of the clients. Only a few or even no documents are maintained in the statutory books in many offshore countries. Any changes in the offshore company do not have to be reported to the centrally maintained register of that country.
Offshore banks is the term used for a range of banking, credit, and financial institutions that hold the financial side of the offshore company outside the country. These are the banks dealing anything relating to the offshore activities of the clients. The term is also used for tax-havens i.e. the banks regulated under fiscal and liberal legislation.
Formation of these banks and financial institutions aims at:
Offshore banks are preferred by the clients with offshore companies because these banks:
Offshore companies are generally used as investment vehicles or holding companies. They are not permitted to conduct business operations onshore in UAE or within the relevant freezone. However, they can freely conduct business outside the UAE and can also enter into contracts with legal consultants, lawyers, accountants and auditors. It is also permitted to lease property and use it as a registered office or own real property in limited areas such as Palm Islands or Jumeirah Island, or any property approved by the relevant freezone authority.
All the power of management for an offshore company generally rests with the board of directors and a general manager is typically not appointed. The board may choose to delegate certain powers as they see appropriate, under a power of attorney.
The capital requirements for an offshore company vary according to the jurisdiction it is based in, with a minimum capital requirement of atleast AED 10,000.
As per the ruling issued in 2011, entities (a free zone company or a free zone establishment) operating in free zones can open branches in Dubai. As per Law No. 13 of 2011 on business registration and licensing in the Emirate, it was announced that free zone companies are allowed to conduct business within Dubai (outside their free zone) once they have a DED license or set up a branch in mainland Dubai.
A freezone entity can do business in the Rest of GCC and Internationally from its freezone setup. Also, law no. 13 issued in 2011, states that free zone companies can set up a branch in Dubai to trade legally, without the need of a local sponsor. They will, however, need to have a local service agent. According to the law, the local service agent can be a UAE national or a UAE company which will sponsor employees for the Dubai branch of a free zone company at the Ministry of Labour. The local service agent will have no rights of voting or decision-making in the company.
Various private sources like banks and investment groups provide financing options, given the entity is more than 2 years old and the business owner is a resident of UAE. Neither the Government of Dubai/UAE nor the Free Zone authority will provide any financing.
As per UAE Laws, you are allowed to receive or transfer capital and profits outside the country.
There are more than 40 Free Zones operating in UAE, with over 20 freezones in Dubai alone. IBG Consulting can make things simple for you by helping you choose the right freezone for your business.
Yes you can lease the property where your business is located in the free zone.
Dubai has a number of free zones each with its own sector preference. Their facilities, rules and regulations may also vary. For example, Jebel Ali Free Zone and Dubai Airport Free Zone allow activities such as import, export, packaging, manufacturing, processing, storage and logistics. Dubai Healthcare City is the hub for healthcare related businesses. Depending on your business/company/trade type, you can choose which free zone suits you.
Different free zones have different minimum capital requirements to set up a free zone company. The amount may vary according to the type of the business. On average you will require at least AED 150,000 to set up a free zone company. The amount may vary from one free zone to another.
Depending on the company type and the free zone laws, you may or may not require an annual audit. Every free zone has its own laws and regulation.
An onshore company is a company that incorporates in a particular region or country along with its business operations in another country according to all of its tax filing requirements and other legal compliances. Unlike offshore companies that intend to do business seeking for tax and legal benefits in a country, onshore companies keep their business process utilizing the resources of the home country.
Onshore outsourcing is also called near-shore outsourcing or domestic outsourcing. It is a process that involves one or more business processes or services of an external but local company. With onshore outsourcing, companies utilize their services, products, supports, contacts and other operations. It helps the companies reduce their support staff and internal infrastructure while keeping themselves complied with the legal and operational requirements of business.
A beneficiary is the owner of an onshore company whereas ownership may formally belong to someone else. It is kept veiled and the information about the ownership is provided only to the concerned banks and the agent responsible for the registration.
Nominee shareholders are the persons who are officially registered and recognized as owners of the company. Thus they work at front desk offering their services while the actual owners confidentially keep themselves at the back end. Nominee shareholders are not entitled to issue and manage any instructions; they are to ensure the confidentiality of the actual owners.
Yes, beneficiary is the actual owner who receives the income of the company.
These are the remarkable benefits of onshore companies:
Some countries facilitate the owners of onshore companies with extra perks like:
Tax on any business depends on the tax rates defined by the government of that country. Tax information is available on the websites of every country. Withholding tax is a tax that is charged on the income generated through a business whereas interests, dividends, and royalties are applied. Generally, companies have to pay withholding tax.
If you do not need your onshore company anymore, you cannot discontinue it overnight. Dropping it needs to follow the policy and legal procedures of the particular country that will take hold of the liquidation of that company and liabilities according to the jurisdiction.
Onshore companies often have costs of training the staff, travel, and communication lower than the offshore companies where there is a risk of overseas engagement.
Some of the companies require an outsource provider for vertical market expertise to fulfil their unique needs. The offshore provider model focuses on the volume of specific process transactions against different segments in an industry.
If someone wants an onshore company in another country, he should have to register the company with a partner resident of that country. It will be under foreign ownership and the owner will require a license from the relevant government authorities of that country. Apart from registering the onshore company, such activities in different countries are also subject to license:
To liquidate a company, you will have to pay the annual maintenance fee and a prior notice to the agent of the company is also a must. The agent starts the process of liquidation and once a company that is removed from data, cannot be registered again. If the process of liquidation is not followed and there is any violation found, penalties can be imposed. Company’s accounts in the banks will be closed and resident visa may be cancelled.
Offshore and onshore companies are different in their registration, documentation, procedures, and other processes. Therefore, it is almost impossible to change the status of an offshore company to an onshore.
Real estate, travel and tourism, facility management, maintenance, economy Islamic, electronics, renewable and alternative energy, medical tourism, education and manufacturing are among the most promising sectors in UAE.
Immigration rules and regulations vary from one Emirate to the other. For example, the zone authorities differ in Dubai, but the rest of the main immigration rules are all the same as other Emirates.
Arabic and English are the primary languages accepted for documents and application in UAE.
No. It is not possible to acquire business licensing from outside UAE. Business licensing requires the investor to attain Emirates ID which is only possible if the investor completes registration while in UAE.
Free zones allow 100% foreign ownership without the owner’s presence in the country. However, it is mandatory to have a General Manager looking after the office in the owner’s absence.
A free trade zone is a tax free zone created for facilitating international business dealings. These free economic zones allow 100% ownership and hold their own specific rules and regulations depending on the Emirate.
Registering your company in UAE gives you
A mainland company is a non free zone setup registered with Department of Economic development (DED) that allows the investor to freely conduct business operations in any area within UAE. To make this setup happen, a UAE national must sponsor the venture giving him 51% ownership of the company.
Registering your company with the government body (DED) gives you the following benefits
In order to obtain a DED mainland or non-free zone license, you have to go through a lot more documentation and formalities than free zone license. It is a lengthy procedure that requires signature of your sponsor as well.
To start a free zone limited liability company in Dubai (FZ-LLC) with the least capital, you need to consider first the level of activity your company does. According to the latest cost analysis, the current minimum cost ranges from AED 20.000 – 25.000 p.a.
Choosing legal form for your company again depends on your business type, level of activity, number of owners, nationality of owners and ownership criterion. Three most common forms are:
It partly depends on the rules and regulations of the free zone, and partly if the business has individual or corporate shareholders. However, the average time taken to get a business up and running is in between 3-6 weeks.
The primary documentation is based on the following provisions